Gerry Robinson has pinned his hopes on Rentokil Initial shareholders overthrowing management and installing him as chairman, after he ruled out a bid for the pest control-to-security services firm yesterday.

But Mr Robinson's statement that shareholders backing him had started talks with Rentokil about his possible remuneration was dismissed as misleading by the company.

"[ The board] remains strongly supportive of the current management team and sees no merit in destabilising a recovery programme that is well under way," Rentokil said.

Chief executive Doug Flynn began reviewing the company when he joined in April and has said he believed its problems could be fixed, while warning that it would take time.

On Monday, Mr Robinson said in a statement issued by his company Raphoe Management Ltd that he and some Rentokil shareholders had agreed on performance criteria for financial arrangements outlined by Raphoe on September 8th.

"Raphoe understands that on this basis, shareholders have entered into discussions with the board of Rentokil," Raphoe said.

A Raphoe spokesman would not say what percentage of Rentokil was held by the shareholders, nor would he give details of the performance criteria.

Rentokil shares closed 1.3 percent higher at 154.75 pence to value the company at £2.8 billion ($4.9 billion). They hit a six-month high at 173 pence high on August 22nd, when Mr Robinson first formally announced his interest in Rentokil, after closing at 151.25 pence during the previous trading session.

The cost of insuring Rentokil's debt against default fell. "A lot of the nervousness surrounding a potential LBO [ leveraged buyout], a potential gearing-up of the balance sheet, has receded," one trader said.

Bondholders suffer in LBOs because the target company's balance sheet is loaded with debt to fund its acquisition, hammering its credit rating.

On August 25th, Rentokil said it planned to keep the company largely intact after a strategic review and posting a 20 per cent fall in first-half profit.

On September 8th, Raphoe said it would release Mr Robinson from a five-year contract to allow him to become full-time executive chairman of Rentokil, and in exchange it would receive up to 46.3 million Rentokil shares, or about 2.55 percent of the company, over three years.

Mr Robinson led a takeover of the Forte Hotel Group in 1996. - (Reuters)